Lauren's Blog: The Enormous Negative Impacts of the New Tariffs on the
Technology Sector
https://lauren.vortex.com/2025/04/08/tariffs-technology-enormous-negative
Well, the executive summary for this one is that we're probably facing
VERY significant price hikes across the board that are likely to
seriously impact consumers, businesses, Internet firms that build
those massive data centers, basically everybody. These technologies
are of course now fundamental to our everyday lives.
The administration has now announced what would be a total tariff on
China of over 100%. The fact is tariffs ARE effectively taxes and
they're paid by us in the importing country not by the exporting
country. And part of what likely is driving a lot of confusion is that
we're often getting conflicting statements and conflicting ideas about
what the goals of these tariffs are.
Are they to raise money? To punish countries for their own tariff
regimes? To punish countries for trade imbalances? Some combination?
Tariffs WILL raise money for the government, but again that tariff
money is coming from us not from those other countries. And not all
trade imbalances are necessarily horrible things, they can represent
the fact that the U.S. is a relatively wealthy country that can choose
how and where to obtain products the most economically, especially
when making them locally isn't really practical.
There are conflicting signals from the administration regarding
whether the tariffs are negotiation tactics and/or if they're intended
to try drive manufacturing back to the U.S., and those goals also can
easily be in conflict with each other.
It's understandable why there's nostalgia toward the period many years
ago when the U.S. was a manufacturing powerhouse before it moved more
into the services sector over the decades. But realistically that's
being somewhat viewed through rose-tinted 20/20 hindsight. Right now
we're a quarter of the way into the 21st century. Not just the U.S.
but the entire global trade, manufacturing, and supply chains have
utterly changed since way back then, in many ways significantly to the
advantage of the U.S economy overall in the long run.
Now maybe in theory, if you were willing to spend enough on factories
and had workers willing to work at wages similar to those paid in
countries like China for example, and you were willing to wait the
years necessary to build up those factories and infrastructures --
maybe theoretically you could get some significant portion of that
high tech manufacturing back, assuming stable economic signals from
the government.
But is this practical? Well, there's the rub. The infrastructure, the
resources (some of which like rare earths are almost completely
controlled by countries like China), engineering expertise, worker
structures, and all the rest do not seem as if they're likely to ever
significantly return here anything like they once were.
Take the iPhone as just one example, because as I said, this affects
these industries across the board. Something like 90% of iPhones are
reportedly manufactured in China. It's estimated that it would take
three very disruptive years, and 30 billion dollars for Apple to move
just 10% of their supply chain from Asia to the U.S.
And since you can't reasonably expect U.S. workers to work for Chinese
wages, plus so many other costs that are much higher here, you'd
probably be looking at iPhones that could cost three times as much as
they do currently.
Now the billionaires would still have those silly grins on their faces
and couldn't care less about much higher prices whether from tariffs
or anything else. But for ordinary consumers and even firms of pretty
much every size, the effects from the kinds of price increases we're
likely see from these tariffs on a vast array of tech products can't
help but have major negative impacts. The additional costs to
consumers and businesses will likely be dramatic and could trigger
many additional negative ripple effects.
In a short report like this I can't really do more than address the
tip of this giant iceberg, but the bottom line is that at least as far
as the tech segment is concerned, it's very difficult to find
realistically optimistic aspects to any of this. We should keep our
eyes open for any positive developments of course, but this is yet
another one of those situations where it's probably not a great idea
to hold your breath.
- - -
--Lauren--
Lauren Weinstein
[email protected] (https://www.vortex.com/lauren)
Lauren's Blog: https://lauren.vortex.com
Mastodon: https://mastodon.laurenweinstein.org/@lauren
Signal: By request on need to know basis
Founder: Network Neutrality Squad: https://www.nnsquad.org
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Co-Founder: People For Internet Responsibility
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